The global spotlight is turning toward Asia this week, with several high-level meetings scheduled between the United States and key regional partners, most notably China.

US Treasury Secretary Scott Bessent has begun a diplomatic tour across Asia. His first stop in Tokyo included meetings with Japanese Prime Minister Sanae Takaichi, Finance Minister Katayama, and Bank of Japan Governor Kazuo Ueda. Discussions focused on currency markets and rare earth supply chains.

The delegation then travels to Seoul on May 12–13 for pre-summit trade consultations with Chinese Vice Premier He Lifeng. These talks aim to finalize potential announcements ahead of the upcoming summit between Donald Trump and Xi Jinping, following a year-long trade truce agreed in Busan after a period of retaliatory tariffs.

The diplomatic sequence will culminate in a state visit to Beijing on May 14–15. The primary economic objective is expected to be securing increased Chinese purchases of US goods, particularly agricultural products. China is likely to maintain firm positions on critical minerals, technology restrictions, and sanctions.

The commercial nature of the visit is underscored by the presence of leading US executives, including Elon Musk and Tim Cook. Notably absent is Jensen Huang. This geopolitical backdrop coincides with the release of key US inflation data, with both CPI and PPI expected to rise further, potentially influencing monetary policy expectations.

In recent weeks, the interest rate differential between the US and the eurozone has widened. Earlier assumptions suggested Europe would face a more severe inflation shock requiring tighter monetary policy. However, eurozone data has consistently undershot expectations, while the US economy has remained more resilient.

The recovery in US equities has reduced expectations for near-term rate cuts. At the same time, the Federal Reserve has adopted a more coordinated tone, with several officials signaling a move away from an easing bias.

Despite this backdrop, the US dollar remains relatively weak, prompting closer attention to the relationship between EUR/USD and global equity indices.

Technical Analysis

Since mid-September 2025, indices such as the S&P 500, DJ30, and DAX have traded within a broad range before recently breaking higher, particularly in the US. Meanwhile, EUR/USD has been in a sideways pattern since around July.

US500, US30, GER40, EURUSD, Sept 2025 to Present

Two key observations emerge. First, US equity indices have outperformed during this period of moderate dollar weakness, with only a brief interruption between December and January.

Second, there is a clear visual relationship between equity performance and EUR/USD movements. Periods of dollar strength, reflected by a decline in EUR/USD from 1.18 to 1.15, tend to align with weaker equity markets. Conversely, recent dollar weakness has supported further gains in equities. This relationship appears particularly strong in the DAX.

This dynamic is significant as it links equity index performance to foreign exchange movements, providing an additional reference point for market participants.

From a technical perspective, the EUR/USD range remains well defined. If the pair continues to hold within this structure, a move lower could follow, potentially after testing the 1.1850 level. This scenario aligns with current US labor market strength and inflation trends.

EURUSD, Daily, June 2025 to Present

A decline in EUR/USD could signal a pause in the current equity rally, particularly if accompanied by higher Treasury yields and a firmer dollar. Conversely, a sustained move toward 1.20 would likely reinforce bullish momentum across global equity markets.